Compelling Economics Statistics

I subscribe to BusinessWeek, and am not above poaching compelling statistics from their articles to share with you. Together, they tell the story of how our economy is working (or not working) today.

• Consumer spending is the most important contributor to economic growth. It accounted for 2/3rds of the growth in real GDP last year. In the second half of last year, it contributed all of GDP growth (April 23 2007 BW). Household spending was soft in the 2^nd quarter of 2007. Consumer outlays adjusted for inflation grew about 1.5% - 2% at an annual rate after gains averaged 4.25 in the two previous quarters. Are higher gas prices the culprit?

• In the three months through March, retail food prices rose at 7.4% annual rate, the fastest such pace in 17 years (May 7 2007 BW).

• Food & gas make up about 20% of consumer spending (July 30 2007 BW).
  

• Slower business inventory growth subtracted a large 1.2% from the 4^th quarter 2006 GDP rate (May 14 2007 BW).

• And here's one statistic which should make you distrust statistics:

  Sales of new homes soared in April by 16.2%, the largest monthly gain in 14 years, an annual rate of 981,000 home sales (June 11 2007 BW).

• Why are corporate earnings so strong? Because foreign earnings are strong (thanks to a weak dollar, which cuts the prices of U.S. goods abroad): 1^st quarter earnings receipts from abroad are up 15.6% from a year earlier. 2nd quarter were equally as strong. Corporate profit margins up to 14.5%. Foreign profits have surged at an average of 19% per year since 2002 (June 18 2007 and September 17 2007 BW).